3 Reasons to Avoid Filing for Bankruptcy

If you can avoid filing for bankruptcy, you may be better off, in a number of ways. Every year, millions of people file for bankruptcy. The filing can scar them for many years. While it might sound like an attractive option, it can work against you. Here are a few reasons that you should avoid filing for bankruptcy at all costs.

1. Affects Your Credit

The biggest reason that you want to stay away from bankruptcy is because it drastically affects your credit. When you file for bankruptcy, it will stay on your credit report for at least 10 years. This can hurt you in a number of ways and you will not be able to get away from it. Your credit score is the most important financial number that you have. It affects everything that you try to do. Therefore, you should try to protect it as best you can. While you might get a second chance on accumulating debts, you do not get a second credit score. Once you ruin it, it is very difficult to build it back up.

2. Future Purchase Problems

After you file for bankruptcy, it will be very difficult to purchase anything in the future. Every time you need credit to buy something, you will be under heavy scrutiny. When you try to buy a car, they will pull your credit file. When you try to buy a house, they will pull your credit file. Everything that you try to buy with credit will be negatively affected by your bankruptcy. Many times, you will not be approved for the purchase that you want to make.

If you are approved, you will most likely have to pay more money because of your bankruptcy. They will charge you a much higher interest rate and possibly some type of fee. Most of the time, you will have to put up a large deposit on anything that you try to buy. Even when you turn on your utilities or get a cell phone, your deposit will be much larger than normal. Just be prepared to go through a struggle every time you need to buy something if you file bankruptcy.

3. Bankruptcy Changes

Another huge reason to avoid bankruptcy is that it does not represent what it once did. In the old days, when you filed bankruptcy, it represented a completely fresh start for you. Any debts that you had accumulated were just written off and you started over. Therefore, if you had $50,000 worth of credit cards, they could just cancel the debt and get you back to square one. This made bankruptcy very attractive for those that were deep in debt. Under today's bankruptcy law, it is very difficult to get a completely fresh start. Most of the time, you will still have to pay the majority of your debt off. This means that the most attractive incentive of bankruptcy is not as easy to get as it once was. 

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